I recommend that the reader follow any one of these links

• Sheep Art Video (2:45)
• Sheep Art Video (2:45)
• Sheep Art Video (2:45)

each of which should be to a copy of the same video as that of the other two links.

The Classic Monty Hall Problem

Andy is a contestant in a game. In this game, each contestant makes a choice amongst three tags. Each tag is committed to an outcome, with the commitment concealed from each contestant. Two outcomes are undesirable; one is desirable. Nothing reveals a pattern to assignments.

After Andy makes his choice, it is revealed to him that a specific tag that he did not choose is committed to an undesirable outcome. Andy is offered a chance to change his selection. Should he change?

Three Contestants

Andy, Barb, and Pat are contestants in a game. In this game, each contestant makes an independent choice amongst three tags. Each tag is committed to an outcome, with the commitment concealed from each contestant. Two outcomes are undesirable; one is desirable. Nothing reveals a pattern to assignments. In the event that multiple players select the same tag, outcomes are duplicated.

After all contestants make their choices, it is revealed that Andy, Barb, and Pat have selected tags each different from those of the other two contestants. And it is revealed that Pat's tag is associated with an undesirable outcome. Andy and Barb are each offerd a chance to change their selections. What should each do?

This story

is not getting much attention from the main-stream media.

I will be working on a Gadsden-flag bumper-sticker for my car.

In the past, I've asserted that San Diego is seriously over-built. Hillcrest, the neighborhood in which I live, has many commercial sites that have been empty for some time. As an œconomist, I naturally wonder why the landlords haven't lowered the rent to a point where some party takes occupancy.

One possibility would be that the landlords were hoping for an up-turn in the economy. The possibility would make them more reluctant to commit to long-term leasing contracts at what would be present market-clearing rates, and might make them reluctant to even rent month-to-month, as there would be difficulties getting short-term renters out as quickly a more desirable renter might want to begin using the site.

Part of what would make it difficult to remove month-to-month renters would be local and state laws and regulations governing evictions. And other interventions in the market could be holding rents and vacancies at unnatural levels. For example, the structure of tax law might make sometimes make it advantageous to leave a property idle.

In any case, the numbers of vacancies, and durations of some of them, would be difficult or impossible to explain based simply on reference to market forces.

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308 Washington Street, half-a-block from where I live, was a Hollywood Video rental store when I first moved to Hillcrest. (Most or all of their wares were VHS tapes at that time!) At some point, they hived-off perhaps a fifth of the site for digital electronic game rentals. Eventually, this section became a separate store, 302 Washington Street, and then Hollywood Video vacated that section, which was then rented to a UPS franchise store. Some time in late 2007 or in 2008, Hollywood Video shut down the store at 308 Washington Street. Since then, the building has stood about four-fifths empty, with a large sign advertising its availability.

Finally, yester-day, I saw a crew in the site gutting things in what I take to be the first stage of a renovation.

The last time that someone was poking-around in 308 Washington Street, I asked Scott, who works at the UPS store, lives in the same complex as I, and frequents the same coffee house (Babycakes) if he knew who the party was, and he said that rumor held it to be PetCo, which we agreed would be cool. Last night, Art, who lives in the same complex and works part-time at the coffee house express hope that the new store would be, er, a Denny's Restaurant, and didn't like the idea of a pet supply store there, in spite of being a dog-owner. Art sees PetCo stores as essentially big boxes like Wal·Mart stores. Well, there's some truth to that. On the other hand, Denny's Restaurants are open all day, almost every day of the year, and can be associated with a lot of traffic. Our immediate neighborhood could become more congested and louder late at night with a Denny's Restaurant. But I don't think them a likely renter there.

[Up-Date (2009:03/26): Scott tells me that word remains that 308 is to be occupied by a PetCo store.]

A few days ago, while barefoot in my apartment, I stumbled a bit, and came down wrong on the largest toe of my left foot, basically stubbing it on the floor, with most of my mass coming down behind it. It swelled and bruised darkly. Since then, its swelling and bruising has abated, but the bruising has been moving back, following the underlying skeleton, now to the first cuniform. If the earlier bruising and swelling hadn't been visibly diminishing, I would have responded to this backward movement of bruising by limping to one of the nearby emergency rooms. As it is, I look at it as a painful curiosity.

The USPS doesn't have enough business, but prices will go up on 11 May. As I said, Basically, officials increase the price per letter in an attempt to off-set the cost per letter which increases as the number of letters decreases because of past price increases. It’s a death-spiral. Added to that now are the effects of the present economic down-turn, but most of the decrease in volume is just a continuation of established trend.

[…] administrative staff positions at the district level nationwide are being reduced by 15 percent. More than 1,400 mail processing supervisor and management positions at nearly 400 facilities around the country also are being eliminated and nearly 150,000 employees nationwide are being given the opportunity to take an early retirement.

Normally, a fair share of early retirees would plan on taking other jobs. In the present economic climate, benefits would have to be higher than otherwise to induce people to take earlier retirement.

[Up-Date (2009:07/17): Some time after this entry was posted, CoolShaving.com removed its fraudulent claims, which had been up since at least 19 July 2006.]

At CoolShaving.com, they claim

Believe it or not, a young man actually thought we killed badgers to get these bristles for our shaving brushes. Nothing could be further from the truth. The manufacturer of these superior quality brushes maintains a flock of badgers that are more pampered and coddled than any badger in the wild, or any domestic animal for that matter.

The page on which they advertise the line of shave brushes doesn't identify the maker in text, but on the handles one can see that these brushes are branded Col. Ichabod Conk.

The Conk brushes are manufactured by Progress-Vulfix Ltd and by Dovo.

Progress-Vulfix Ltd makes no claims about a flock of badgers[1] nor of not using the bristles of killed badgers on the page where they describe their brushes at VulfixOldOriginal.com nor on that at Progress-Vulfix.com. Neither the string cruelty-free nor vegan are found at VulfixOldOriginal.com, nor at Progress-Vulfix.com

The brush that Dovo supplies to Conk isn't listed on the page of brushes sold by CoolShaving.com. But, for the record, the strings ohne Grausamkeit [without cruelty], Grausamkeit-frei, cruelty-free, and vegan do not appear at the Dovo site.

CoolShaving.com is registered to Jim H. Hedgepath of 129 Minnie Fallaw Road, Lexington, SC 29073-8226.

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[1] A company of badgers is called a cete /sit/.

In the entry in which I previously discussed tax incidence, I made the point that (setting aside transactions costs) the distributed burden of a per-unit tax is the same regardless of whether the tax is formally imposed upon the buyer or upon the seller or upon both. I didn't, though, explain who then actually bears the burden, because that was irrelevant to where I was going with the entry. But it has preyed upon my mind that I didn't explain that bit.

The answer is that the burden falls most heavily on whichever party is least flexible in response to the monetary price.

Imagine, for example, that buyers, driven by some internal compulsion, must always buy (or try to buy) the same quantity of something, regardless of its price. Price won't necessarily rise without limit, because of competition amongst sellers. If a per-unit tax is formally imposed upon buyers, well, they'd buy that same quantity and then pay the tax on top of what they'd been paying the sellers. Setting aside feelings of pity, or somesuch, the sellers would just shrug. If a per-unit tax is formally imposed upon sellers, then they can otherwise pass along the full cost to their buyers, and competition isn't going to help buyers because the sellers all face the same increase in their costs, so that their calculated optimal prices just increase by the amount of the tax.

On the other hand, if sellers somehow always had to sell the same amount while buyers were flexible, then the shoes would be on the other feet. If the tax is formally imposed upon sellers, then they'd just sell the same amount at the price where quantity demanded absorbed that amount. If the tax is formally imposed upon buyers, well, then buyers are at least going to slightly reduce their consumption unless the sellers cut their prices to fully-offset the tax, so the sellers do this if they must sell that same amount.

When the tax isn't actually per unit, the mathematics and the results can be somewhat messier, but the same underlying dynamics will decide the distribution of the burden.

---

In that earlier entry, I said The next time that you hear or read of a politician arguing for employer-provided benefits, such as for health-care, consider the incidence. My primary point at that time was that there may be little or no difference in ultimate burden between a tax formally imposed upon employers and one formally imposed upon employees. But let's pursue the question.

Supposèd advocates of the interests of employees often call for requiring various sorts of employee benefits. At the same time, these alleged advocates tend to model the labor market as if workers have very little choice in their terms of employment. But if, indeed, workers don't have much flexibility, then it will be they who bear most of the cost of the mandated benefits — implicitly they are forced to buy the benefits, rather than spend their wages or salaries on other things.

The accuracy of that characterization of inflexibility will vary across regions, times, and employee-types. All else being equal, it will be less true in times when employers are competing heavily for workers, and more true in times when employees are struggling to find or to keep jobs. Thus, for example, in a recession, employees tend to bear more of the cost of benefits supposedly funded by employers.

Okay, now Barack Obama is a lawyer, and at some point in her life Nancy Pelosi and all or virtually all of the Members of the House of Representatives have been exposed to Article I §8 of the United States Constitution, where it says

No bill of attainder or ex post facto Law shall be passed.

But, here the House is passing a bill to effect an ex post facto tax, which if it becomes law will be struck-down by the Supreme Court as unconstitutional. It would be the taxpayers who paid for the hopeless defense of the unconstitutional law, just as they've paid for the time spent for the House to craft and pass this unconstitutional bill. There's no attempt here to protect the money of the taxpayers; there's just a lot of posturing by Congressmen and by the President at the expense of the taxpayers.

The best that ever could have been accomplished would have been to make a precondition of the bail-out money be that those who continued employment with these firms would agree to waive some level of compensation for the previous year. (There'd still be the issue that some recipients have left the employment of these firms, and that others might refuse to waive their compensation even though it would cost the firm the state funds, and some of those who refused might have contracts that precluded their dismissal for such refusal.)

It never so much as occurred to those who designed the bail-outs to attempt to impose even those sorts of preconditions, because they regard themselves and the executives of these firms as part of a same elite, for whose benefit the bail-outs are primarily designed.

In any case, the House of Representatives, with the blessings of the President, is consciously spending money for nothing but political gain.

In economics, when we write or speak of the incidence of a cost or of a benefit, we refer to the ultimate distribution.

Most people get the idea that, often, costs or benefits can be passed along, so that the party upon whom they formally fall isn't necessarily the final recipient. This is certainly true of taxes.

There's a standard result of microëconomics that, if one sets aside the effects of transactions cost (dat ol' debbil), then the incidence of a per-unit tax is same, regardless of whether it is formally placed on the seller or formally placed upon the buyer. Almost every first-term microëconomics course demostrates this result, although they usually dumb-it-down by failing to note that transactions costs can somewhat undermine the equivalence.

The argument goes as follows: Imagine that the quantity offered for sale fits some function S(P_s) where P_s is the price received by the seller, and that quantity that buyers seek fits some function D(P_b) where P_b is the price that buyers must pay. If the pre-tax price is just P, and sellers have to pay additional tax and tax-related costs of t_s, and buyers have to pay tax and tax-related costs of t_b, then

P_s = P - t_s

(tax-related cost subtracted because it is a reduction in the price that what the seller receives) and

P_b = P + t_b

(tax-related cost added because it is an increase in how much the buyer must pay). Algebraïcally,

P_b = P_s + t_s + t_b

and

P_s = P_b - t_b - t_s

And the market would equilibrate where

S(P_s) = D(P_b)

(At a lower P, D would be greater than S, and it would be in the interest of sellers to increase their prices or of buyers to offer a little more per unit; and, a higher P, S would be greater than D, and it would be in the interest of sellers to cut their prices a bit, or for potential buyers to cut the amount that they offered.) Which is to say that the equilibrium is

S(P_s) = D(P_s + t_s + t_b)

as if the buyer formally paid all the tax on the seller's received price, and

S(P_b - t_b - t_s) = D(P_b)

as if the seller formally paid all the tax on the buyer's paid price.

(The next time that you hear or read of a politician arguing for employer-provided benefits, such as for health-care, consider the incidence.)

Now, let's consider the incidence of a tax on carbon emissions (ignoring the question of whether there should be such a tax), in the absense of transactions costs, the incidence would be the same whether the state formally taxed the producer of the emissions, or taxed the consumer of each product associated with the emissions, based upon the amount of the emission associated with that product. But it is plainly less costly to place the formal tax on the producer than to have separate filings for each consumer.

Which brings me to this story:

Whatever measures are imposed to curtail carbon emissions, they can be conceptualized as a tax. And it's really, folks, not that the Chinese officials don't understand that the incidence would be the same (or very nearly the same) in the absence of transactions costs, nor that they don't recognize that the transactions costs would be lower if the tax were formally imposed upon producers. Rather, it's that the Chinese state

• knows that some consuming nations would avoid or evade the tax, lowering the incidence upon China,
• would be able to disguise some of its emissions for domestically consumed production as emissions for exported product, and
• would like to misdirect blame for any failure to reach agreement.